The main purpose of buying a life insurance policy is to make sure that after your death, your nominee or legal heir gets the sum assured. It should not be the case that after you die, the insurance company rejects the claim payable to the nominee. Therefore, it is important for you to know which insurer has maintained a good record in settling death claims.
The Insurance Regulatory and Development Authority of India (IRDAI) publishes ‘Death Claim Settlement Ratio’ every year in its annual report.
What is claim settlement ratio?
The claim settlement ratio (CSR) reveals the percentage of claims the insurer has paid out during a financial year. In simple words, CSR is defined as the percentage of insurance claims settled by an insurer compared to the total number of claims received.
For instance, if the death claim settlement ratio of an insurer is 90 percent, it means that the insurer has settled 90 death insurance claims out of every 100 insurance claims received. This way the death claim settlement ratio is said to be 90 percent as the remaining 10 percent insurance claims are rejected by the insurer.
Yusuf Pachmariwala, EVP and Head of Operations, Tata AIA Life said, “The higher the death claim settlement ratio, the more confidence consumers will have on the life insurer as it is reflective of the insurer’s commitment to its consumers. Hence, a higher death claim ratio is considered a good indicator for a life insurance company.”
He further said, “Claim settlement ratio also helps one understand the overall risk management ability of a life insurance company. It indicates how efficiently the insurer has implemented necessary technology and process to weed out applications which are not genuine.”
The CSR is calculated with the help of the following formula:
Claim settlement ratio = (Number of claims settled/Number of claims received) x 100
Generally, higher death claim settlement ratio (in %) means that the chance of settlement of a claim by the life insurer is higher.
The below table shows IRDAI’s death claim settlement ratio of life insurers for the year 2018-19
|S.No.||Life insurers||Death claim settlement ratio (%)|
|1||TATA AIA Life Insurance||99.07|
|2||HDFC Life Insurance||99.04|
|3||Max Life Insurance||98.74|
|4||ICICI Prudential Life Insurance||98.58|
|5||Life Insurance Corporation||97.79|
|6||Reliance Nippon Life Insurance||97.71|
|7||Kotak Life Insurance||97.4|
|8||Bharti Axa Life Insurance||97.28|
|9||Aditya Birla Sun Life Insurance||97.15|
|10||Exide Life Insurance||97.03|
|12||Star Union Daichi Life Insurance||96.74|
|13||Aegon Life Insurance||96.45|
|14||PNB MetLife Insurance||96.21|
|15||Aviva Life Insurance||96.06|
|16||Edelweiss Tokio Life Insurance||95.82|
|17||IDBI Federal Life Insurance||95.79|
|18||Future Generali Life Insurance||95.16|
|19||SBI Life Insurance||95.03|
|20||Bajaj Allianz Life Insurance||95.01|
|21||Canara HSBC OBC||94.04|
|22||India First Life Insurance||92.82|
|23||Sahara India Life Insurance||90.16|
|24||Shriram Life Insurance||85.3|
Source: IRDAI Annual Report 2018-19
The figures mentioned above are published annually, i.e., published for the previous year in the annual report. For example, the figures for death claim settlement ratio of life insurers, mentioned above, are for the year 2018-19. Click here to see the IRDAI annual report.